Commentary on commercial issues relating to climate change

An Oil and Tar Furphy in the US

The politics of oil is looming large in the run-up to the US presidential elections. Petrol (gas) prices are on the rise, and Obama and Department of Energy chief Steve Chu are being accused of causing the problem. That’s not the extent of the issue: also at play is the determined lobbying of oft-Republican aligned oil companies to take advantage of high prices to expand drilling to unconventional and marginal sources currently locked up by regulation. Steve Levine makes the point this week in an Oil & Glory blog post at Foreign Policy.

Obama is doing and has done some sensible things to address oil price vulnerability: continued support of commercialisation and break-through alternative energy funding, and much less glamorous work such as vehicle fuel performance standards. We’re a little less enthused about the sense of periodic releases from the Strategic Petroleum Reserve (of which another is due shortly, if you’re prepared to believe the rumours). The capacity to influence short-term prices at the pump is somewhat limited, with emerging market demand largely setting the price.

One of the more ludicrous assertions that has been picked up by various frothing partisans is that the US has huge oil resources which could be tapped if only the Administration would act. This assertion is made specifically in relation to the Green River Formation: the largest oil shale reserve in the world, spanning three states (Wyoming, Utah, Colorado) and mostly under public (federal) land. Recently, here in Australia Climate Spectator ran a broader piece on shale oil and oil shale reserve assertions.

The Green River oil shale resource is estimated at 1.44 trillion barrels of oil. See a resource map here at the U.S. Geological Survey briefing note on the Green River basin.

Here’s the important point: the USGS doesn’t even attempt to make an estimate of what is economically recoverable. Oil majors have tried and failed to find an effective way to drill and release the oil, and no-one is ready to provide any form of time horizons as to when suitable technology might become available.

So, while correct that the resources are there, for all the good they’re going to do for US energy independence in the short- to medium-term, they may as well not be. That’s why they aren’t booked as ‘reserves’.

A much smaller amount of more accessible oil is locked up in Utah – in tar sands. This amounts to between 12-19 billion barrels.

Current plans to enable leasing of public tar sands land in Utah are for about 91,000 acres – far less than a 2008 plan conceived under the Bush Administration for 431,000 acres.

However, given the environmental sensitivities associated with tar sands extraction and processing, it looks like any production rates from Utah tar sands is likely to be pretty small.

This region doesn’t look like the answer to US energy security for the time being.